Is Tatra Deal Sub-Standard?

Updated: April 21, 2012 4:17 pm

Only experts can determine whether Tatra trucks purchased by the Army are of the right quality or not. Mr VRS Natarajan who heads the government-owned co-manufacturers of Tatra trucks, Bharat Earth Movers Limited (BEML), has affirmed that there have never been any complaints about the quality of the trucks. But according to The Hindu newspaper General VK Singh in 2008 had formally complained about the performance of the trucks in the super high altitude areas of Sikkim. Tatra trucks may or may not be sub-standard, but speculation abounds about whether the Tatra trucks deal is sub-standard or not. Many claims are being made in the media that raise questions which need to be addressed by the government in order to scotch all unhealthy, and possibly unfair, speculation regarding the Tatra deal.

Speculations and rumours arise from the background of the deal. The Tatra deal was first signed by the government in 1986, the same year when the Bofors deal was signed. At that time Rajiv Gandhi was Prime Minister and Defence Minister and the influence exercised by Mr Ottavio Quattrocchi was at its height. Omnipol Foreign Trade Corporation of Czechoslovakia manufactured Tatra trucks and signed the deal. At that time, before Gorbachov’s reforms, Eastern Europe including Czechoslovakia was dominated by the erstwhile Soviet Union. Close Soviet link with Rajiv Gandhi was established through the disclosure by an official spokesperson of the Russian government in 1992 that the KGB had made payments to Rajiv Gandhi’s family in order to promote the Soviet Union’s foreign relations.

In 1992 the Indian public sector undertaking, BEML, started buying the trucks from Tatra Sipox UK. This was after the Soviet Union had collapsed and dislocation in Eastern Europe had created an economic flux. According to CNN-IBN the UK-based Tatra Sipox was a trading company and not the original manufacturer. CNN-IBN claims to have documents to prove this. Procuring trucks from Tatra Sipox violated Indian law which dictates that all procurement should be directly from the manufacturer and not through a third party. A third party could act as middleman. Middlemen were banned after the Bofors scandal. Tatra Sipox’s balance sheets during those years showed a working capital of only 30,000 pounds and it was registered to provide “spiritual, religious and social services”!

In 2003 when BEML and Tatra Sipox sought to widen relationship the Equipment Branch of the Army raised objections to the deal. CNN-IBN claims to have in its possession a copy of a letter in which inconvenient questions regarding the deal were asked about the identity of the original manufacturer, the source of procurement, the price and the precise role of Tatra Sipox UK. But according to CNN-IBN within two months the letter was cancelled for reasons not known. Subsequently the ownership pattern of the companies changed. BEML signed a joint venture with Vectra of which Mr Ravi Rishi who is currently being questioned by the CBI is the major shareholder. Mr Rishi left India decades ago after the Directorate of Revenue Intelligence registered a case under the Cofeposa law against his company, Rishi Electronics. The case was closed because it became time barred after 10 years. Between when the deal was first signed and 1997 the government had purchased 7000 Tatra trucks.

However problems for the government related to this deal did not end. Mid-level officials of BEML would refuse to renew the contract on several grounds. They demanded that Tatra Sipox supply the latest versions of the trucks which the company had not done. In 2003 Tatra Sipox admitted that it had provided outdated models of Tatra trucks and formally agreed to provide the latest versions. But in practice that was never done. The DNA newspaper claims that a former BEML official confirmed that Tatra Sipox kept the agreement vague in order to supply inferior models. Tatra Sipox also kept increasing the price. A November 25, 2008, letter from BEML official was quoted by the daily: “Tatra Sipox (UK) Ltd is well known for its unjustified demand for increase in prices”.

All such media reports fuel public speculations about the real beneficiaries of the deal. While owners of the involved companies may change, do the power brokers and beneficiaries who facilitate dubious deals also change? This question not surprisingly is surfacing after Mr Quattrocchi’s son, Massimo, set up an office in Bengaluru, 35 miles away from the BEML plant in which Tatra trucks are assembled. He represents his father’s Luxemburg-based firm, Clubinvest, which provides consultancy to European firms regarding business deals in various countries. Since 2004 he has established his office in Bengaluru. He makes frequent visits to Bengaluru. Perhaps he feels comfortable in the State where Mr HR Bhardwaj is the Governor. It may be recalled that on February 06, 2007 Mr Ottavio Quattrocchi was detained in Argentina on the basis of an Interpol warrant. The Indian investigating agency CBI was criticized for putting up a very weak effort for his extradition. India lost the case. The Argentina judge remarked: “India did not even present proper legal documents”. India was even asked to pay Mr Quattrocchi’s legal expenses! Karnataka Governor Bhardwaj was at that time India’s Law Minister. Mr Massimo Quattrocchi was present in India at the time of his father’s Argentina arrest in February 2007 and there was media speculation that he may have met Mrs Priyanka Vadra around that time. Mr Massimo Quattrocchi is a close childhood friend of Mrs Sonia Gandhi’s children.

It would greatly help end unhealthy speculation if Mr Massimo Quattrocchi were to reveal the business interests in India he is engaged in promoting for his father’s firm, Clubinvest. More to the point, a speedy and transparent investigation by the CBI into the Tatra truck deal should end all rumours and unhealthy speculation.